The S&P 500 has rallied almost 50 per cent since bottoming 18 months ago and there’s little sign of a slowdown, with the index up 8 per cent already in 2024 and hitting 18 record highs this year.Bank of America’s Savita Subramanian recently said the S&P 500 is “egregiously expensive” relative to its past, with 19 of 20 valuation metrics indicating stocks look pricey relative to history. The index trades on 24.5 times trailing earnings, which is more than 95.5 per cent of prior readings.
Similarly, Ritholtz Wealth Management’s Michael Batnick notes the S&P 500′s cyclically-adjusted price-earnings ratio has averaged 26 over the last 20 years. Before the dotcom bubble, such a reading was only ever seen once, during the speculative mania of the roaring 20s, which was followed by the 1929 Wall Street crash.Ryanair chief Michael O’Leary on track for €100m bonus
, and these elevated valuations are largely supported by their fundamentals. In other words, the US may appear expensive, but it’s more expensive for a reason.